Market cautious on new Telstra chief

Page Tools

It would take at least six months to assess whether Solomon
Trujillo, the new chief executive of Telstra Corp, was really the
right man for the job, analysts say.

A day after his July 1 appointment was announced, financial
markets in Australia reacted cautiously today, sending the
company's stock down four cents to $5.03 by 1210 AEST.

"His credentials stack up well on paper, with expertise across
all facets of Telstra's business," Citigroup analysts said.

"Despite this, he remains an unknown quantity in the
Australasian market and it will take at least six months for
investors to ascertain whether he is the right candidate for the
job."

Analysts and the media will get their first glimpse of Mr
Trujillo when he flies into Melbourne for a series of meetings this
weekend.

Mr Trujillo, a 53-year-old veteran of the US telecoms market,
says he is looking forward to taking up his position at one of the
few remaining fully integrated telecommunications companies in the
world.

Telstra chairman Donald McGauchie has trumpeted Mr Trujillo's
appointment, saying that he knew at first sight that he was the
right man to lead the company which is preparing for its full
privatisation as early as next year.

But analysts said how Mr Trujillo would go about his mandate of
"reinvigorating" Telstra was uncertain given that the company faces
significant operational and regulatory challenges.

Telstra must address a decline in its traditional fixed line
revenue as more customers migrate to wireless products.

It is also evaluating calls from federal politicians and the
industry to separate its wholesale and retail businesses.

Industry group, Competitive Carriers Coalition, said this week
that Telstra's decision to participate in the debate about
operational separation of its business was a welcome change in
attitude.

"The value of any operational separation proposal Telstra
presents will be measured against whether it addresses the
fundamental competitive problem identified by the ACCC - Telstra's
incentive and ability to discriminate against those seeking access
to bottleneck infrastructure," it said.

The issue of operational separation is the subject of a federal
government scoping study into Telstra which is also examining the
best way to go about floating its 51.8 per cent stake.